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Betfair markets related to Donald Trump’s future are kicking off again as FBI investigations into the US President and his closest allies intensifies. At odds of 1.63, the chance of him serving a full first-term in office has slipped to 61% from around 68%. At yesterday’s low point, it was just 58%.

As ever with the Trump rollercoaster ride, this is an unprecedented scenario for political bettors. Never before has pricing up the chance of a president being removed from office been a priority. There is no formbook or scoreboard. Our judgement is reliant upon our own interpretation of a developing news story, stemming from mainstream media which is far from trusted by all. In these polarised times, that means we will draw very different conclusions.

Personally I’m a long-term sceptic of Trump’s ability to survive and predicted these odds would start moving in last month’s chaos update. Arrest or impeachment has seemed realistic from the outset and the likelihood is getting stronger.

However we Trump layers were famously humiliated in 2016 and there are plenty of bettors who think the Russia investigation is a rabbit hole. Thanks to this rare opportunity to hedge between political markets that are contingent upon one another, we can both win.

In effect, Trump’s political future is a series of stand-alone events – an accumulator. In order to win a second term, he needs to survive a full-term, choose to run again and then win the Republican Nomination, then finally the general election. Any combination of none, some or all of those events is plausible.

By trading and hedging between these markets over the next year, we should be able to set up profitable positions ahead of 2020, for which markets will really liven up next summer, following declarations and with the first primary debates. Here’s how some potential scenarios could pan out and thoughts on the best way to play them.

Of course a fundamental problem with employing such strategies in size is tying up considerable sums for up to 2.5 years. Another is that we can only make a rough prediction regarding future odds in these markets. In some cases, we may need to cash out of positions early before reinvesting – for example Trump survival, once the primaries start but before he’s completed a full term.

I’m therefore loathe to recommend a precise, rigid staking plan. My strategy is basically to lay as much of these Trump 2020 odds for as much as my bank will afford, building the position as we get closer to the primaries. Another advantage of laying 2020 is that, once funds are tied up by the initial bet, we can lay others to the same risk. These markets always include no-hopers and so far, I’ve added Michelle Obama, Hillary Clinton, Mark Zuckerberg and Dwayne Johnson – at combined odds around 7.0. Along with the Trump lays, the combined odds of my lay position is around 2.2.

Below, however, is a rough guide for readers to follow, to be updated in the months and years ahead. To be clear – I’m not having the Trump cover part of the bet yet, because I think the end may well be nigh. But if you want to hedge from the outset, here’s the plan.

Lay (oppose) Donald Trump to be Next President 100u @ 3.2

Lay Donald Trump to be Republican Nominee 100u @ 1.64

Lay Donald Trump to leave office in 2018 10u @ 10.0

Next step: On 1/1/2019, Lay Trump to leave office in 2019. Stakes to be advised at the time.

To summarise, if Trump either leaves office early or decides not to run for a second term, the first two lays will yield 200 units profit. Our maximum loss on the other side of the trade at this stage is 90 units, if he goes this year. So an imminent departure would settle all those positions and yield 110 units profit (minus whatever small cashout loss if so desired).

If he’s still there at the end of 2018, we’ll make ten units on the first leg of our Trump saver accumulator. The plan then will be to lay 2019 to lose 100 units – the initial 90 risk plus the ten units profit.

As recently as 2014, political betting was arguably the most reliable market for favourite-backers. Suddenly it’s become a haven for historic upsets. Anyone who thought 2016 was a freak year got a rude awakening last month. Based on their respective positions at the start of each campaign, Labour denying a Conservative majority was a bigger upset than either Brexit or Donald Trump’s defeat of Hillary Clinton.

Market after market was turned on it’s head. The reason, of course, is that expert opinion, narrative and therefore markets are driven by conventional wisdom – which breaks down during changing times. So what is changing and what lessons can we learn going forward?

The ‘late swing towards the status quo’ theory is bust

It used to be a given that governments would recover late in the campaign, as voters stuck with ‘the devil they know’. It sounds logical and the evidence stacked up. The theory applied to every Conservative win between 1983 and 1992, the 2014 Scottish Independence referendum and when the last three incumbent US presidents won a second term. It was probably a factor behind David Cameron’s surprise majority in 2015.

After a year of earthquake election results, the theory no longer inspires confidence. We will never know whether there was a late swing to the status quo in the EU referendum – as implied by the polls – because it is quite possible that the polls were always understating Leave due to differential turnout.

However the theory certainly fell down with Trump, as undecided voters broke decidedly for the outsider candidate and that phenomenon very much seems to apply to Jeremy Corbyn. While it was no great surprise to see a pro-Labour swing mid-campaign, their late momentum was unprecedented in living memory. Only one poll during the entire campaign predicted they would get 41%. Indeed, their 40-45% vote share was matched well above 200 to 1 on the Betfair exchange!

When Theresa May called this election seven weeks ago, the overwhelming consensus predicted a landslide victory. Any non-partisan voices suggesting Labour could put up a fight, let alone deny the Tories a majority, were extremely hard to find. Yet here we are on election eve and there are plenty of punters willing to stake sizeable amounts on precisely that, or even Jeremy Corbyn to become PM.

I am not among them. In fact, while the general narrative implies a dramatic turnaround, my positions haven’t changed much at all. I began by arguing that Labour’s resilience was being underestimated, and that the English anti-Tory vote had nowhere else to go. That initial bet on Over 177.5 seats has since shortened from 3.5 to 1.3. Given that my final prediction has them on 208, there’s no plan to cover. Here’s my complete predictions for the 632 seats in England, Scotland and Wales.

Phrases such as ‘must-win’ and ‘do-or-die’ have often been used to define the challenge facing parties in UK by-elections. Rarely, however, could such terms have legitimately applied to two different leaders. Yet one bad result on Thursday night could prove ruinous for either Jeremy Corbyn or Paul Nuttall.

It is hard to recall a night quite like it. Usually stand-alone, by-elections are often one-sided non-events and rarely have profound significance. Here we have two highly competitive contests on the same night, both of which will provide much-needed clarity about party politics and voter intention in the post-Brexit era. We even have a unique Copeland and Stoke By Election Double market.

Were it not for the referendum – even assuming Labour MPs Jamie Reed and Tristram Hunt had still triggered these contests by resigning mid-term – neither Copeland or Stoke would have attracted much attention. The Betfair market would point towards predictable defences – just as Labour managed in 17 of 18 mid-term defences since losing power in 2010.

Instead, the Copeland market strongly points towards the first gain by a governing party since 1981. The money has been relentless for the Conservatives, who were backed down to a low of 1.29, equivalent to a 77% likelihood, before settling around 1.4 (71%).

If the money is right and Labour lose a seat they’ve held for 70 years, it would surely deepen the crisis surrounding Corbyn’s leadership. Against a backdrop of appalling personal ratings, a double-digit national polling deficit and his small band of supportive MPs dwindling by the day, Corbyn is already trading around 1.4 (71%) to leave post before the next election, and 4.4 (22%) by the end of March. Defeat in either by-election could prove a tipping point.

The demographics and politics of the Cumbrian seat – older, whiter, pro-Brexit – do not bode well. This is precisely this type of voter that is alienated from Corbyn, and drawn closer towards Theresa May than any Tory leader this century. Perhaps most significantly, the nuclear industry is the main employer, making Corbyn’s longstanding ambivalence towards it a massive handicap.

Whatever one thinks of Brexit, Donald Trump and the wave of anti-establishment populism sweeping the Western world, we should all be able to agree that politics became a lot more interesting and unpredictable in 2016.

The combination of drama, unique characters and the touchstone issues in play helped justify predictions of becoming the biggest ever year for political betting. First the EU referendum, then the US Election, broke the all-time record for money traded, with nearly £200M matched on Betfair’s Next President market alone.

Just as these historic upsets rocked the assumptions of elites, pollsters and media pundits, they altered the narrative surrounding this growth industry.

Previously, betting markets had built a long reputation as an ultra-reliable indicator. National elections were always won by the favourite, with the market accurately reflecting the wisdom of crowds. Plus, there was usually a reversion among voters towards the status quo in the final days.

Famously, the formbook was ripped to shreds. Both Brexit and Trump were rated around 10-15% likely by betting markets on election night. Rather than reversion, both results represented a rejection of the status quo. Trump owed victory to a huge advantage among late deciders whom form followers would have put in the column of a safety first, qualified candidate like Hillary Clinton.

Once upon a time, political betting was just about the most predictable game on earth. National elections were won by the favourite. Period. Then along came 2016 and, like just about all things political, all of our assumptions and long-established trends became redundant.

With Brexit and Donald Trump fresh in the memory, political bettors seem more willing than ever to take on a short-odds favourite. And in the biggest market since the Trump miracle, that strategy is paying off handsomely.

We’d already seen plenty of drama in the French election last year, when surprising candidates came through the primary process. Long-term favourite Alain Juppe traded down to 1.45 (69%) to become Next President, only to fall at the first hurdle by failing to win his party’s nomination. The man who seemed his principal rival – former President Nicolas Sarkozy – also traded at odds-on before a humiliating primary defeat.

After becoming the UMP candidate Francois Fillon’s odds collapsed from 190.0 to a low of 1.4, equivalent to a 71% chance of winning May’s presidential election. Short-odds backers, however, are already braced to take another big-hit.

With Fillon’s candidacy now mired in a corruption scandal known as Penelopegate, his odds are in freefall. From 1.83 (55%) a week ago, tonight’s latest quote is just 4.0 (25%), with Emmanuel Macron taking over at the head of the market.

The news just doesn’t get any better for Jeremy Corbyn. Facing yet another rebellion from his MPs, this time over the Article 50 vote, today’s Yougov poll puts Labour 16% behind the Tories. Now, the market signals for next month’s two by-elections project historic defeats that would plunge his troubled reign into a potentially terminal crisis.

In Copeland, the Conservatives remain firm 1.63 favourites, despite Labour holding the Cumbrian seat since the 1930s. At 3.0, Betfair punters give them just a 33% chance of retaining it.

Defeat there will be a disaster, though not necessarily terminal for Corbyn, because Labour are already expected to lose what was already a fairly tight seat. This relatively old, white, Brexit-supporting electorate, in an area dominated by the nuclear industry, is precisely the type that feels alienated from ‘metropolitan Labour’ and in particular the leader’s socially liberal, left-wing, anti-Trident platform.

To lose a seat like Stoke, on the other hand, would confirm that Labour are genuinely facing an existential crisis. Theresa May’s party aren’t a problem here and have reportedly given up, leaving the path clear for UKIP to sweep through in another heavily pro-Brexit seat.

The US Election votes are still being counted but with each day that passes, this result looks ever more like the greatest electoral anomaly in living memory. Hillary Clinton is on course to win by the popular vote by around 2M votes, yet suffer a resounding 306-232 defeat in the electoral college.

This isn’t an excuse. I argued many times that the electoral college favoured the Democrats nowadays and am happy to fess up to being completely blindsided by this result. Trump redrew the map in a way other Republicans have only dreamed – that fact is unarguable.

Nevertheless, we need to understand why the overwhelming majority of pundits – and betting markets – were proved so spectacularly wrong.

Pollsters are predictably taking flak and differential turnout seems almost certainly to have been a factor – just as it was with Brexit and the 2015 UK General Election. We know that older voters turnout far more reliably than younger ones – favouring the Right.

However these don’t tell the whole story, nor really vindicate talk of a ‘silent majority’. If that was so, Clinton wouldn’t be winning the popular vote. Pollsters weren’t so far off the mark.

One area I believe requires further examination is the electoral system, and the effect it has on undecided or voters that are less than enthusiastic about the main options. It almost certainly applies to UK elections too, and have long suspected goes a long way towards explaining how almost everyone called our 2015 General Election so wrong.

Unlike countries that use proportional representation, both the USA and UK have first-past-the-post (FPTP) voting systems, with results awarded on a winner-takes-all basis by constituency or state. The effect is to create the sense of a binary choice – despite the political preferences of both electorates being increasingly diverse.

Could it be that respondents answer polls honestly, listing their favourite choice, yet end up going for a tactical option on the day, having considered the realistic effect of their vote?

While FPTP worked perfectly in the 1950s, when Conservatives and Labour shared over 95% of the vote, it was inappropriate last year, when our TV debates included seven different parties. The big-two haven’t even scored 70% between them since 2001.

Likewise, whilst the 2016 election was always in reality a Clinton v Trump head-to-head, polls consistently showed the public were interested in other options – either via a historically high number of undecided voters, or Gary Johnson and Jill Stein scoring double digits combined.

Yet in both cases, the main two parties were miles apart on policy, the population increasingly partisan and the polls pointed to a very tight contest. Whatever voters felt in their hearts, they knew that a vote for Gary Johnson, Jill Stein, the Lib Dems or UKIP would feel like a wasted one if the ‘wrong’ side won.

Both shock results, I believe, were driven a significant rise in what effectively amounts to tactical voting. Trump owes his electoral college victory to the fact that he dominated among late deciders and the collapse in both Johnson and Stein’s support.

Likewise, the Tories owed their majority in 2015 to almost wiping out their Lib Dem coalition partners – something which was not predicted by constituency markets or polls. A squeezing of Lib Dem or UKIP voters may also have swung several key Con-Lab marginals in favour of David Cameron’s party – again in defiance of polls and markets.

When polled several times during the course of the 2010-15 parliament, the Lib Dems were consistently close or ahead in the constituencies which they already held. The market factored in they’d lose around half of their 57 seats, but nobody saw them getting just 8. Virtually every Lib Dem seat targeted by Labour or the Conservatives fell – and the latter won many more, dramatically altering the electoral maths.

There was simply no polling evidence for anything like the scale of swing in Lib-Con marginals. Nor was there much evidence on the ground or sense among activists. Yet there was undoubtably a big, late swing in these places to the Tories, without which they would never have won a majority.

These voters are often labelled ‘Shy Tories’ or ‘Shy Trumpers’, but I’m not sure that is accurate. They might ideally be Johnson or Lib Dem voters (at least on a local level), but went for the practical option in fear of helping Clinton or Labour.

This would be far less likely to be an issue under a proportional representation system, as widely used elsewhere. They would have no need to switch, as it is usually clear which way a candidate will swing after the election. Hence people are free to vote their conscience.

It is way too early to predict the effect of Trumpism on US politics. There is definitely a yearning for extra choices and in some respects the rise of Trump and Bernie Sanders reflects that. Both parties could undergo ideological transformation, but we can only wait and see how that affects voting behaviour.

So the UK will provide the next test for this theory, whenever the election happens. Ours will remain very much a multi-party system and the fate of both UKIP and the Lib Dems will have a pivotal effect.

Interestingly, Lib Dem performance has regularly blindsided betting markets. In 1997, 2001 and 2005, they considerably overperformed expectations. The logical explanation was that this small party could focus all it’s resources effectively on key targets, yet could never compete on a national scale.

In 2010, they underperformed after a national polling surge, for the same reason. They didn’t have a nationwide organisation, or the resources to compete in inner-city Labour-held seats that had suddenly appeared within range.

Next time could see the trend reverse. Unlike 2010 and 2015, it will probably not be close, with the Tories expected to win big, just as Labour did between 1997 and 2005. The motivation for voters in those (mostly southern) Con-Lib marginals to ‘stop Labour’ may no longer exist, leaving them free to switch back.

The first test of that is looming at the Richmond by-election, which the Lib Dems are trying to turn into a contest about Brexit. I’m not convinced they’ll oust the sitting MP Zac Goldsmith and suspect it is too early for this new dividing line to truly reap dividends. It is, nevertheless, an interesting work in progress.

When I was first asked my prediction to be the Next US President back in July 2015, the answer needed no hesitation – Hillary Rodham Clinton. She was favourite on Betfair’s market back then and, despite a rollercoaster ride over the next 16 months including the constant threat of indictment, has never surrendered that position. That market trend is identical to Barack Obama between 2008 and his second victory in 2012.

After the conventions, I doubled down, laying out seven reasons why Trump wouldn’t win. Entering the final 24 hours of this unforgettable race, I’m as confident as ever about her chances, for at least the following five reasons.

1) The fundamental dynamics became fixed once Donald Trump secured the nomination

Make no mistake, Clinton has been extremely fortunate to face this opponent. Had the GOP picked John Kasich or Marco Rubio, I believe she would now be staring down the barrel of a big defeat. Even a divisive figure like Ted Cruz would have roughly a 50/50 chance against this flawed Democrat candidate.

However after an anarchic, damaging process that may haunt the party for years to come, the Republicans ended up with the worst candidate in presidential history. Trump won via his celebrity and ability to monopolise media coverage. It turned the entire election cycle into a referendum on him.

While that just about worked when playing to an unrepresentative primary audience, it is catastrophic for a General Election. From the outset, Trump has been toxic to a majority of Americans. Half of all voters have probably never even vaguely considered voting for him.The more he dominates the media narrative, the more entrenched opposition becomes.

Trading inevitably involves navigating peaks and troughs in the market. Timing is pivotal to success.

Whilst it has been profitable so far and I remain extremely confident about the outcome, on the latter point, I can’t say I’ve played this election cycle well. In the primaries my cover bets on Trump were terribly timed, probably halving the profit.

So too, with hindsight, I wish I’d covered against Clinton when she was around 1.2 last week before the FBI news broke. Had I done so, my bank would be bigger going into these closing stages when liquidity is great and so many good bets are appearing.

The reason I didn’t is the same reason I’m not covering now. Then I felt even 1.2 understated her chance and so too does 1.35 now. I simply cannot see a realistic path to Trump getting 270 unless the polls are systemically wrong. I don’t believe they are and am struck by this recent NYT analysis that suggests any ‘missing’ white voters are actually likelier to be Democrat. The reverse theory has been my sole nagging doubt.

Moreover, the handicap odds have always under-stated Clinton. As I wrote earlier this week, these markets offer outstanding value.

If Clinton wins – and I’m very confident – she will likely win the most valuable swing states. For example Florida’s 29 votes – and the market is moving her way as early voting progresses – would take her well in excess of 300 electoral college votes.

Moreover, I believe we are likelier to see surprise results in the states where Trump is strong favourite – Arizona, Utah – than in the ones where he needs to pull off a big upset like Pennsylvania, or Michigan. (Nevertheless these last two states remain the best way of covering, if that is your preference). Even in the states which I expect Trump to win – Ohio, Iowa – his amateurish ground game is too much of a worry to bet at odds-on.

My current electoral college prediction is either 322 or 323 – depending on Maine CD2, which I’m loathe to call. Arizona would take us up to 333/334 and I’m happy to keep that on side. New Latino registration is stronger here than anywhere else in the country.

Regarding updates, the best place to follow me is on Twitter. The odds are moving so fast and I’m not always in a position to blog immediately. When I do, it appears on there immediately.

Sometimes it isn’t worth posting specific new bets because the odds will disappear. For example, I’ve backed Clinton to win Nevada at 1.44 – for 30 units – but she’s mostly been shorter since. That bet was strongly implied in my recent piece regarding side markets but I haven’t specifically advised a stake.